Alan inherited $101,000 with the stipulation that he "invest it to financially benefit his family." Alan and his wife Alice decided theywould invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for theirson Cooper's education.Initial investmentInvestment horizonVacationHome$50,5005 yearsAlan and Alice have a marginal income tax rate of 32 percent (capital gains rate of 15 percent) and have decided to investigate thefollowing investment opportunities.Cooper'sEducation$50,50018 years.Complete the two Annual After-Tax Rate of Return columns for each investment.Note: Do not round intermediate calculations. Round your final answers to 2 decimal places.Growth stockCorporate bonds (ordinary interest taxed annually)Dividend-paying stock (no appreciation and dividends are taxed at 15%)Municipal bond (tax-exempt)X Answer is not complete.5 Years5.753.50Futurevalueis $67,5003.20%%%Annual After-Tax Rate ofReturn3.91%2.98 %%%18 Years4.753.50Futurevalueis$165,0003.10%%%Annual After-Tax Rate ofReturn3.232.98%%%%

Investment=$50500Future value after 5 years=$67500Future value after 18 years=$165000Capital gain…

Alan inherited $101,000 with the stipulation that he "invest it to financially benefit his family." Alan and his wife Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son Cooper's education. Initial investment Investment horizon Vacation Home $ 50,500 5 years Cooper's Education $ 50,500 18 years Alan and Alice have a marginal income tax rate of 32 percent (capital gains rate of 15 percent) and have decided to investigate the following investment opportunities. Complete the two Annual After-Tax Rate of Return columns for each investment. Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. Corporate bonds (ordinary interest taxed annually) Answer is not complete. 5 Years 5.75 % Annual After- Tax Rate of Return 3.91 % 18 Years 4.75 % Annual After- Tax Rate of Return 3.23 %

Alan inherited $101,000 with the stipulation that he "invest it to financially benefit his family." Alan and his wife Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son Cooper's education. Initial investment Investment horizon Vacation Home $ 50,500 5 years Cooper's Education $ 50,500 18 years Alan and Alice have a marginal income tax rate of 32 percent (capital gains rate of 15 percent) and have decided to investigate the following investment opportunities. Complete the two Annual After-Tax Rate of Return columns for each investment. Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. Corporate bonds (ordinary interest taxed annually) Answer is not complete. 5 Years 5.75 % Annual After- Tax Rate of Return 3.91 % 18 Years 4.75 % Annual After- Tax Rate of Return 3.23 %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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